Partners in prosperity: Japanese investment in Australia grows in 2023

Australia and Japan’s economic partnership strengthened in 2023, with Japanese FDI hitting a record A$133.8 billion last year.

Australia and Japan’s strategic economic partnership continued to strengthen and evolve in 2023, thanks to record Japanese investment deals in Australia. A total of 53 merger and acquisition (M&A) transactions and 38 new partnerships were signed in 2023. 

Japanese investment occurred across multiple sectors including:

• decarbonisation
• technology
• financial services
• real estate
• consumer goods
• infrastructure
• innovation.

Japanese foreign direct investment (FDI) stock in Australia reached a high of A$133.8 billion for the 2022 calendar year. Japan is Australia’s third largest source market for FDI.

2023 investment trends

This year’s report highlighted a number of trends and drivers reflecting the robust bilateral trade and investment relationship. They included:

• growing investment in decarbonisation projects, including renewable energy, hydrogen and ammonia, battery energy storage systems and carbon reduction technology
• the rise of Japanese investment in real estate, particularly build-to-rent
• the key but often under-recognised role that Japanese financial institutions play in Australian project finance.

The report also found Australian startups and research institutions continue to be highly sought after by Japan to drive the next generation of innovation. For instance, an increasing number of large Japanese corporations are investing in and acquiring small to medium Australian enterprises. The enterprises typically have technologies that Japanese corporations can scale for global applications.

These findings were detailed in the Japan-Australia Investment Report 2023: Partners in Prosperity. Produced by Herbert Smith Freehills and the Australian National University, the annual report analyses Japan-Australia investment and the prevailing trends driving the investment relationship.